O2 churn in Q2 falls to record low with 199k contract adds made

Churn falls to ‘market-leading’ one per cent in Q2, with its mobile contract base growing six per cent from last year

O2’s churn in Q2 fell 0.1 per cent yearly to reach its lowest ever level of one per cent, which the firm said “remained market-leading.”

The operator added 199,000 contract customers (140,000 excluding M2M) in the quarter. Its mobile contract customer base grew six per cent year-on-year to reach a total of 23.8 million, up three per cent from the same period last year.

Its contract segment rose two per cent from Q2 2013 to account for 56 per cent of its overall mobile base.

O2 lost 8,000 prepay customers in the April to June period, which was a vast improvement from the 208,000 deficit in the first quarter of this year.

According to the operator, this was driven by the launch of its ‘Big Bundles’ tariffs on May 29, which are priced at £10, £15 and £20 top-ups per month.

Each one offers double minutes, texts and data of the previous Big Bundle, with the cheapest coming with 100 minutes, unlimited texts and 500MB of 3G data. The two more expensive tariffs come with 4G data at no extra cost.

Smartphone penetration also rose two per cent on an annual basis to reach 50 per cent.

Revenue was up slightly by 0.1 per cent from Q2 2013 to £1.386 billion. Mobile service revenue fell by the same margin to hit £1.092 billion, but this was an improvement from the 2.6 per cent decline in the previous quarter. As a result, OIBDA margin dropped 2.2 per cent yearly to 23.6 per cent.

The firm’s digital loyalty programme, O2 Priority, was used 1.3 million times by customers in the quarter, who were able to take advantage of more than 2,000 offers.

It’s most popular offer was the £1 Monday lunch, which has saved O2 customers 400,000 since launch on May 19. Using the O2 Priority app, customers can gain access to a discounted lunch at their nearest outlet of Upper Crust, Dominos, Pumpkin Cafe and Caffe Ritazza.

O2’s network modernisation programme continued in the quarter, with further upgrades to its 2G and 3G networks and continued roll-out of 4G. Belfast and Lisburn in Northern Ireland were two cities to benefit from this.

In Belfast, O2’s data traffic has grown by 23 per cent with 4G accounting for 26 per cent of all traffic in the city. A further £5 million will be invested in Northern Ireland this year to extend 4G to other areas.

O2’s 4G network is now available in 217 towns and cities and since launch on August 26, 2013, has grown to cover 43 per cent of the UK population outdoors.

O2 UK CEO Ronan Dunne (pictured) said: “In an ultra-competitive market, loyalty is key. Our results continue to show that we have the most loyal customers in our sector, driven by our relentless pursuit to deliver a range of innovative products, services and unique experiences that set us apart from our competitors.”